What to Know About Estate Planning Changes in 2026

By Published On: January 26, 2026Categories: Tax Tips, Services - Tax

As we begin 2026, significant federal tax law changes continue to shape the estate planning landscape. Several provisions enacted in 2025 now take effect, offering planning opportunities but also requiring thoughtful review of existing plans. This update highlights the most relevant federal changes for estate, gift, and generation-skipping transfer (GST) tax planning in 2026.

Lifetime Exemption Increased to $15,000,000

Effective January 1, 2026, the federal lifetime exemption for gift, estate, and GST taxes increases to $15,000,000 per individual — or $30,000,000 for a married couple who make a portability election and timely file the necessary return. This permanent increase, enacted as part of the One, Big, Beautiful Bill Act (OBBBA), represents a significant rise from the previously scheduled reduction and provides expanded planning flexibility.

  • This exemption amount will be indexed annually for inflation beginning in 2027, adding predictability to long-term planning.
  • Families with high net worth can transfer substantially more wealth free of federal transfer taxes, subject to existing gift, estate, and GST tax rates.

Annual Gift Tax Exclusion Remains at $19,000

For calendar year 2026, the annual exclusion for gift tax purposes remains at $19,000 per recipient (or $38,000 for a married couple making a gift-splitting election). Gifts that qualify for the annual exclusion do not reduce lifetime exemption amounts and generally do not require filing a gift tax return (Form 709).

Federal Tax Rates Unchanged

The top federal rates for estate, gift, and GST tax remain at 40%. These rates apply to transfers that exceed available exemptions.

Portability Rules Continue

The ability to transfer a deceased spouse’s unused exemption (known as portability) remains intact for 2026. Electing portability requires timely filing of a federal estate tax return, even if no tax is due. The filing window extends up to five years after death with a valid application for extension. 

Charitable Deduction and Retirement Provisions

Some related tax provisions that can intersect with estate planning include:

  • Itemized Charitable Deduction Floor: For 2026, taxpayers may only deduct charitable contributions above 0.5% of adjusted gross income (AGI) when itemizing, which may influence year-of-gift strategies for donors.
  • Qualified Charitable Distributions (QCDs): Individuals over age 70½ may make QCDs directly from IRAs up to the annual limit, which can satisfy required minimum distributions (RMDs) and support philanthropic planning.
  • Retirement Accounts: New rules affecting RMD timing and Roth catch-up contributions (requiring Roth treatment for catch-ups in certain qualified plans) should be factored into planning where retirement assets interface with estate strategies.

Planning Considerations

Revisit Lifetime Gifting Strategies: With the elevated lifetime exemption, clients may reconsider the timing and amount of lifetime gifts. Large gifts made in 2026 or later will utilize the higher exemption amount and can reduce future taxable estates.

Review Trust Structures and Formulas: Estate plans that contain formulas tied to older exemption levels may require revision to reflect current federal amounts and client objectives.

Coordinate State Tax Plans: Federal changes do not alter state estate or inheritance tax regimes. In jurisdictions with their own taxes, planning may require additional or different strategies.

Monitor Future Legislative Changes: While current law permanently sets the higher exemption, future Congresses could amend these provisions. Ongoing monitoring and periodic plan reviews are advisable.

The estate planning environment in 2026 offers expanded federal transfer tax exemptions and continued planning flexibility. Nonetheless, careful coordination with broader wealth transfer, retirement, charitable, and income tax goals is essential. We encourage review of existing estate plans in light of these changes and consultation with estate planning professionals to ensure your strategies remain aligned with your objectives. Reach out to SDK today at 612-332-5500 or info@sdkcpa.com to start a conversation with our Trust and Estate team.